agricultural cooperatives - start a co-op in western canada

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Ministry of Agriculture and Food

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The material in this booklet draws heavily from and builds on earlier works published by variousorganizations and government agencies in Canada and the United States. Without the leadership offered inthese works, this material could not have been put together. A partial list is as follows:• How to Start a Cooperative. Rapp, G. and G. Ely. United States Department of Agriculture.• Incorporating a Co-operative. B.C. Ministry of Small Business, Tourism, and Culture.• Starting an Agricultural Marketing Cooperative. Center for Co-operatives, University of California.• Steps to Starting a Marketing Co-op. Zimbelman, K., E. K. Coontz and A. Malan. Center for

Cooperatives, University of California and the Northwest Cooperative Federation.

A complete citation of these works as well as additional references are provided at the end of this booklet.

The publication of this booklet was funded by the Canada/B.C. Farm Business Management Program aspart of the project entitled “Agricultural Co-operatives: An Information Package.” The project alsoincludes a second booklet on co-operative finance entitled “Financing Agricultural Co-operatives: AnOverview” and a web site accessible through the British Columbia Farm Business Management Informa-tion Network located at http://FBMInet.ca/bc.

Material in this booklet was prepared by Andrea Harris, MSc.

Valuable input was provided by Howard Joynt, Project Coordinator and Financial ManagementSpecialist, BC Ministry of Agriculture and Food; Marty Frost, Director, FWC Development Co-operative;Leona Theis, editor; and Martin Chicilo, Saskatchewan Economic and Co-operative Development.

The responsibility for the content and all opinions expressed in this document are the author’s alone. Thereport does not necessarily reflect the opinions of the federal and provincial governments which fundedthe project.

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The Canada/B.C. Farm Business Management Program provides B.C. farmers the opportunity to increaseor improve their business management skills. Projects funded under the Canada/B.C. Farm BusinessManagement Program are reviewed by the provincial coordinating committee, which is chaired by aproducer and comprised of farmers, agri-business, and federal and provincial representatives. Committeemembers contribute their knowledge, interest, and ability in farm business management.

Sharon Malmberg, Producer RepresentativeLarry Campbell, Producer RepresentativeBarbara Querin, Producer RepresentativeLaurie Cohen, Producer RepresentativeAndrea Belsheim, Agricultural Lender

Pamela Byers, Human Resources CanadaBob Hadley, Agriculture and Agri-Food CanadaSylvia Mosterman, Producer RepresentativeRoger Keay, BC Ministry of Agriculture and FoodDr. Rick Barichello, UBC Department of

Agricultural Economics

For more information or additional copies please contact:

Andrea Harris or Howard Joynt, Project Coordinator andVancouver, B.C. Financial Management SpecialistPh: (604) 454-3148 BC Ministry of Agriculture and Food, VernonFax: (604) 454-3147 Ph: (250) 260-3000E-mail: [email protected] Fax: (250) 549-5488

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Defining Features of Co-operative Businesses ............................................................ 1Feature: Comparison of Co-operatives and Other Types of Business .................2

Why Do People Form Agricultural Co-operatives?..................................................... 3Feature: Co-operative Profile ..............................................................................4

Types of Agricultural Co-operatives............................................................................ 5Feature: Co-operative Marketing Arrangements ................................................6Feature: New Generation Co-operative Profile ................................................... 7Feature: Potential Pitfalls for New Co-operatives ...............................................8

-%�+�*�� ....................................................... 9Step 1 - Identify a Common Economic Goal ............................................................... 9

Feature: Guidelines for Conducting Effective Meetings....................................... 10Step 2 - Determine Business Feasibility ...................................................................... 12

Feature: Operating Cost Checklist .......................................................................14Feature: Feasibility Study Checklist .....................................................................15Feature: The Role of External Advisors................................................................16

Step 3 - Develop a Business Plan ............................................................................... 17Feature: Sample Business Plan Outline................................................................19

Step 4 - Draft Legal Papers and Incorporate .............................................................. 20Feature: Co-operative Marketing Agreements .....................................................22

Step 5 - Implement Business Plan and Begin Operations............................................ 23Feature: Board and Management Responsibilities...............................................24Feature: Member Rights and Responsibilities ......................................................26

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Resources ..................................................................................................................... 29References.................................................................................................................... 33

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Co-operatives exist to provide benefits in the formof goods and services to their members. Thisdiffers from the primary purpose of other types ofbusiness organizations—such as sole proprietor-ships, partnerships, and corporations—whichtypically exist to generate profits for the owners ofthe business. Other significant differences betweenco-operatives and other types of businesses have todo with ownership, control, and the way thebenefits from operating the business aredistributed.

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Co-operatives are financed by the people who usethe services provided by the business. Investingrisk capital in a co-operative business is a basicmember responsibility and a function of owningthe co-operative.

In a corporation, anyone with capital to invest maybecome an investor, regardless of whether or notthey use the services provided by the business.Similarly, anyone may establish a sole proprietor-ship or participate in partnerships, regardless ofwhether or not they use the services provided or

patronize the business. Sole proprietorships, part-nerships, and corporations are often referred to asinvestor-owned firms when compared toco-operatives, which are member-owned, and, inthe case of agricultural co-operatives, producer-owned.

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Co-operative control is expressed through theprinciple of “one member, one vote”—eachmember has only one vote regardless of theamount of capital that member has invested in thebusiness. Members’ control over a co-operative isnormally exercised through the election of a boardof directors from the membership. The boardrepresents the membership in providing directionto the business by establishing the overall goalsand policies of the co-op. In a co-operative, thecentral issue of control typically focuses on deter-mining the types of services provided by thebusiness.

In corporations, shareholders normally holdcontrol over the business in proportion to theamount of capital they invest. Shareholders elect a

A co-operative is a type of business which isowned and democratically controlled by itsmembers—the people who use and benefit fromthe services provided by the business. Virtuallyany type of business can be organized as aco-operative. Indeed, co-operatives operate inalmost every sector of British Columbia’s

economy, including financial, retail, housing,forestry, fisheries and agriculture. All are ownedand controlled by the people who use and benefitfrom the services provided by the co-operative.

Agricultural co-operatives are owned andcontrolled by the producers who purchase goodsand services from, or deliver raw commodities to,the co-operative. Co-operatives provide groups ofproducers with the opportunity to own and controlbusinesses related to their farming operations,enabling them to address common problems ordevelop market opportunities.

“A Co-operative is an autonomous association ofindividuals voluntarily united to meet theircommon economic, social and cultural needsthrough a jointly-owned and democratically-controlled enterprise.”

International Co-operative Alliance, 1996

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board of directors who guide the affairs of thecorporation in the interests of the shareholders.The directors may or may not be shareholdersthemselves. The central issue of control in corpo-rations is typically the returns to the shareholders’investment in the firm compared to other currentinvestment opportunities.

In a corporation, if individual shareholders cannotvote or choose not to, they may assign their votingrights to other individuals by proxy. In aco-operative business, voting by proxy ispermitted only under certain circumstances.

In non-incorporated private businesses, individualpartners or proprietors exercise direct control overthe business.

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In co-operatives, benefits are distributed to themembers in proportion to their use of the goodsand services provided by the business. Anysurplus (gross income less expenses) generated

through a co-op’s business operations are eitherreinvested in the business to improve the servicesprovided or they are redistributed to the membersin the form of patronage refunds. Patronagerefunds are calculated in proportion to a member’suse of the services provided by the co-operative.

In investor-owned firms the profits generated fromthe operation of the business are typicallydistributed to investors in proportion to the capitalthey have invested in the firm. In corporations, thisis done by paying dividends on investment shares.

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Co-operatives are incorporated. A member-ownerof a co-operative has limited liability for financialloss. Therefore, like the stockholder in a corpora-tion, a co-op member can lose no more than theamount of money that he or she has invested in thebusiness. In contrast, in a sole proprietorship orpartnership, the owner or partners are liable for alldebts, operating losses or other liabilities incurredby the business.

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The key features of co-operative businesses offerpeople distinct advantages in addressing a varietyof market situations and issues. Agriculturalco-operatives enable producers to realizeeconomic benefits which they could not otherwiseachieve alone. Some of the reasons why producersform co-operative businesses include:

� To improve bargaining power.

Co-operatives can provide groups of producerswith marketing power more comparable to thatheld by processors and other market players.Co-ops do this by gathering market informationand sharing that information with their members orby acting as a bargaining agent on producers’behalf.

� To reduce costs.

Pooling capital and resources through co-openterprises can enable producers to accessservices, such as marketing expertise, that theycould otherwise not afford alone.

� To achieve economies of scale.

By handling large volumes of product,co-operatives can reduce the per-unit cost ofmarketing and processing for producers. Similarly,the cost of inputs and services can also frequentlybe lowered if larger volumes are ordered through acentral agency. Co-ops allow producers to focuson producing goods, rather than on finding buyersand suppliers.

� To increase returns

Because the surpluses generated by co-operativebusinesses are returned to producers on the basisof patronage, co-operatives allow producers tocapture additional profits beyond the farm gate.

� To improve product and service quality.

Co-operatives can allow producers to coordinatethe timing of the delivery of commodities tomarkets. Co-ops can also enable producers toimplement grading systems and standards. Theseactivities can improve the services provided toretail and wholesale outlets and the quality ofproduct available to consumers.

� To reduce risk.

Agricultural commodity prices often fluctuateconsiderably throughout the year. Co-operativesallow farmers to pool their production with that ofother farmers to minimize price and market risk.

� To obtain needed products or services.

Often producers require certain services orproducts which privately owned companies arereluctant to provide due to the small potential salesvolume or uncertain profits. Such producers mayjoin together to form a co-operative to assure theavailability of vital products and services.

Agricultural co-operatives can allow farmers toaddress common problems, develop new marketopportunities or expand existing markets. Aco-operative can give producers access to a largershare of the earnings generated from businessactivities and can also keep these earningscirculating in the local economy. However,co-operatives are not a panacea—they require agroup of individuals who are committed toworking together to address a common economicgoal or need. If this commitment is not there, adifferent business structure may be more suitable.

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Virtually any type of agri-business can beorganized as a co-operative. Traditional types ofagricultural co-operatives include supply,marketing and processing co-operatives. Arelatively new type of agricultural co-operative isthe New Generation Co-operative.

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Supply co-operatives sell a variety of goods toproducers, including petroleum, feed andfertilizers. Services such as breeding, artificialinsemination, and seed cleaning have also beenorganized on a co-operative basis. Depending onthe needs of the producers involved, supplyco-operatives can vary in complexity: rangingfrom simple buying clubs organized by producersto access bulk or volume discounts, to largewholesale and retail operations which provide awide variety of goods and services to a broad rangeof customer-members.

Supply co-operatives may choose to either chargemarket prices for the services and products offeredby the business or they may choose to price at costplus an operating margin. In either case, any profitsgenerated by the business are typically returned tomembers at the end of the year in proportion totheir patronage. The members of supply co-opscan also decide whether or not to sell goods orservices to non-members. Allowing non-membersto purchase supplies or services can often increasethe level of profits generated by the co-operative.

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Producers create marketing co-operatives to jointlymarket, distribute and process their products. Bypooling their resources, producer-members canhire professional marketing specialists and havetheir products processed in plants in which theyhave an ownership stake. Many marketingco-operatives also facilitate producer investment inthe development of brandnames, market researchand product development.

Co-operatives use many methods to account for,and track, the raw commodities delivered to theirfacilities by their members. Some co-operativespay producers a market price upon delivery.Others pay producers a pooled price based on theaverage returns earned by the co-operative over aspecified marketing period (see pg. 5). Still otherco-operatives simply facilitate the transactionbetween the producers and the final buyer,charging the producer on a per-unit basis for thisservice and never retaining ownership of theproduct. In each case, members may receiveadditional payments at the end of the marketingseason, based on the co-operative’s earnings inexcess of operating costs. Depending on theirmandate, co-operatives may or may not market theproduct of nonmembers.

Many co-operatives use marketing agreements as away of specifying the terms under which productswill be accepted, processed or marketed by theco-op on behalf of its members. This enables theco-operative to operate on a more efficient basis.Processing co-ops, in particular, can save costs ifthey match the volume of their members’commodity production to their facilities’ capacity.

Purpose: To market and process producer goods.

Members: The producers who deliver theirproducts to the co-operative.

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Purpose: To provide producers with inputs andservices at competitive rates.

Members: The producers who purchase suppliesand services from the co-op. That is, thecustomers or patrons.

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The name New Generation Co-operative (NGC)refers to a type of processing co-operative whichuses a particular form of marketing agreement toraise the large sums of capital required to invest invalue-added processing activities. As in anyco-operative, to be a member of an NGC aproducer must purchase shares in the business.However, the financial structure of an NGC isbased on equity shares which are tied to the rightand obligation to deliver a certain amount of rawproduct to the processing plant.

The equity shares used by NGCs not only providethe co-op with needed capital, but also commit theproducer to delivering a specified volume of rawproduct to the plant. In turn, the co-op iscommitted to accepting the delivered product, aslong as it meets certain pre-established qualitystandards. As with other contractual agreements,contingencies are incorporated to account forunusual occurrences, such as crop failure. Withfixed supply commitments and quality controls inplace, the co-operative can run its processing

facilities efficiently, producing and developingmarkets for high-quality end products.

The number of shares available in an NGC islimited according to the capacity of the processingplant. Once the plant is operating at maximumcapacity, shares can be traded among memberspending board approval. The price at which theshares are traded reflects the benefits membersexpect to receive from the co-operative over time.The benefits to members include a guaranteedmarket for a portion or all of their production andthe potential to share in the earnings generated bythe co-op’s processing operations.

Upon delivery of raw product to the processingfacility, the members of NGCs typically receive apredetermined portion of the market price. Thisinitial payment is followed by a second paymentat the end of the co-op’s operating cycle. Thesecond payment represents the members’ share,based on the volume of product delivered, of thereturns received from the sale of the finalprocessed product by the co-operative.

To date, no New Generation Co-operatives havebeen formed in British Columbia. However, thesuccess of many NGCs in the upper mid-westernUnited States has generated substantial interest inthis type of co-operative as a model for thedevelopment of agri-based processing facilities inwestern Canada.

Purpose: To add value to producer goods throughthe joint processing of raw commodities.

Members: The producers who purchase sharesobligating them to deliver a specified volume ofraw product to the processing facility.

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The catalyst for forming a co-operative business isa group of compatible individuals who share acommon economic goal and who believe that theycan best achieve this goal by working together.

A common economic goal can be the result of ashared problem or opportunity. For example, thegroup may lack a market for their products or asatisfactory source of farm supplies. Or they maywish to engage in an activity, such as processing,which will allow them to develop their industryand will provide additional sources of income.

� Clearly identify the goal or reason for theformation of a co-operative.

In most cases a common goal will be identified by

a group of prospective co-op members gettingtogether to discuss the issues facing their farmbusiness. These informal gatherings lead to furtherdiscussions and ideas of how a co-operative canaddress the issues common to the group.

To clarify the idea for forming a co-operative:• Research the issues facing your group,

focusing on the biggest obstacles andidentifying current options and potentialalternatives;

• Collect general information on the structureand operation of co-operative businesses;

• Gather information about the kind of businessthat your group is interested in;

• Use the information collected to determinewhich goals a co-op can and cannot address;

• Discuss your findings with as many potentialmembers as possible.

Purpose: To clearly identify a common economicgoal and assess the level of interest in theformation of a co-operative to address this goal.

Starting a co-operative is a complex project whichinvolves careful planning and thorough research.This chapter presents an overview of five basicsteps involved in the organization of a co-operativebusiness:

Step 1 - Identify a Common EconomicGoal.

Step 2 - Determine Business Feasibility.

Step 3 - Develop a Business Plan.

Step 4 - Draft Legal Papers andIncorporate the Co-operative.

Step 5 - Implement the Business Plan andBegin Operations.

Each step represents a point of evaluation where adecision must be made as to whether or not tocontinue with the co-operative, based on researchresults and analysis. In order to build a strong

foundation for the co-op, these decisions willrequire involvement and input from as manypotential members as possible. Effective meetingsare an important part of the development andongoing operation of a co-operative business (seepage 10 for additional information on conductingeffective meetings).

The following pages provide general guidelinesand suggestions for starting an agriculturalco-operative in British Columbia. Whendeveloping projects, groups will need tosupplement this information by accessing otherresources including those available from variouslevels of government, economic developmentorganizations, private sector consultants, lawyersand accountants. Groups interested in starting aco-op are encouraged to refer to the resource list atthe end of this booklet for further information.

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*Much of the material in this section is adapted from “How to Start a Cooperative”, Rapp, G. and G. Ely, United States Department ofAgriculture and “Steps to Starting a Marketing Co-op”, Zimbelman, K., K. Coontz and A. Malan, Center for Cooperatives, University ofCalifornia and the Northwest Cooperative Federation.

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� Hold an information meeting for peoplewho may be interested in forming a co-op.

The purpose of this meeting is to determinewhether or not there is enough interest to start andsupport the ongoing operation of a co-op business.

Plan for an effective meeting by preparing anagenda and arranging for a meeting facilitator.Select a time and location that will be convenientfor most people. Consider holding the meeting inconjunction with an existing producer assembly orconference. Publicize the meeting date, time andplace via association newsletters and magazines,newspapers, telephone, letter or word of mouth.

Primary agenda items should include:• a description of the perceived problem or

opportunity and a summary of how a co-opmight solve the problem or allow producers totake advantage of the opportunity.

• discussion around the following questions:What is the economic goal to be achievedthrough the formation of a co-operative? Do weshare this goal? Does a co-operative makesense as a way of achieving this goal?

• a vote on whether or not to continue to researchthe idea of a co-op. If interest is positive, selecta steering committee which is capable andwilling to continue researching the co-op idea.

Allow plenty of time for discussion and encourageprospective members to express their views andask questions. All issues raised should beaddressed, although the answers to some questionsmay be delayed until more information becomesavailable.

� Select a steering committee.

The steering committee is responsible for guidingthe group through the development process.Specific responsibilities include:• informing potential members of the group’s

progress and coordinating further meetings;• surveying producers regarding their needs;

• collecting market and financial information;• assessing the feasibility of the business;• overseeing the preparation and implementation

of the co-op’s business plan.

The steering committee may undertake these taskswith other potential members or with theassistance of external advisors. When externaladvisors are consulted, the committee will need toact as a liaison between potential members and theadvisors.

� Obtain funding.

The development of a new co-operative can bequite costly. Money is needed to cover the costsassociated with conducting a thorough feasibilitystudy, developing a detailed business plan andhiring professional advisors and consultants.

Options for raising funds include:• asking potential members to contribute directly.

This can be done at the end of the firstinformational meeting. For example, potentialmembers may be asked to sign apre-membership agreement. The signer agreesto join, patronize, and furnish a specific amountof initial risk capital. The initial investmentmay be made in proportion to the intended useof the co-op or through a flat fee.

• asking producer associations or other industryorganizations to fund all or portions of theco-op development process. Many associationshave a mandate to undertake research whichcan serve to stabilize the industry.

• applying for government funding. A number ofprovincial and federal funding programs existto help in the start-up of new businesses. Someof these programs are listed in the final sectionof this booklet. Most require some level ofmatching funds from the applicant group.

The investment of money or time involved infundraising is often an excellent way to test thelevel of producer commitment to project. Allmoney collected must be managed in a mannerthat assures members of security and fiscalresponsibility. Make a plan to address how unuseddevelopment funds will be used or redistributed ifthe co-op isn’t formed.

�� Decision Question: Is there enough interest inthe project to warrant continuing?

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There are three main components in determiningthe feasibility of an agricultural co-operative:• Producer Survey: A survey will determine

producer interest in the project. It will also helpto clarify the products and services which theco-operative might offer.

• Market Analysis: A market analysis willdetermine if the proposed co-operative has aneconomic role to play in the marketplace, andwill clarify how it can best play this role.

• Financial Feasibility Assessment: Thefindings of the producer survey and marketanalysis are used to develop some basicoperating assumptions, allowing for an assess-ment of financial feasibility. This assessmentanalyzes the costs associated with meeting theeconomic goals identified and estimates howmuch income must be generated to cover thesecosts.

Allow the scale and the complexity of theproposed business to determine the time and effortthat goes into examining the feasibility of theco-operative. Depending on your situation, a feasi-bility study need not be elaborate and costly, but itmust address the risks, benefits, strengths andweaknesses of the proposed business. A goodfeasibility study will determine the potential for asuccessful business, but it will not provide anyguarantees. There are no right or wrong answers ina feasibility study – only informed evidence that anidea will succeed or fail.

Much of the information collected to determinefeasibility will also be used to develop a businessplan. The major difference is that the purpose of afeasibility study is to research and analyze all ofthe possible options for action before a decision ona particular course of action is made. The businessplan summarizes the plan of action after a decisionhas been made.

Throughout this step, be prepared to work with anumber of external advisors who are familiar withyour industry, agricultural markets and theco-operative development process. If the proposedco-op is intended to serve a large number ofmembers or undertake complex business opera-tions, you will want to hire or otherwise enlist aconsultant to obtain an objective, independentassessment of the project’s financial feasibility. Anindependent consultant can also help to preserveconfidentiality when undertaking producer andmarket surveys (see page 16 for further discussionon the role of external advisors in starting aco-operative).

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� Survey potential members.

Survey as many potential members as possible.Producer associations, industry organizations andgovernment representatives are useful sources foridentifying potential members. Use a questionnaireto survey producers by mail or in person. Surveyscan also be conducted at scheduled group orassociation meetings.

Ask the following types of questions in yoursurvey:• What goods or services do you have a need for?• How do you feel about forming a co-operative

and participating in it?• How much business volume do you anticipate

generating for the co-operative?• Are you willing to invest in the co-operative?• What are your location and business or service

preferences?

It is important that your survey be thorough, confi-dential and accurate. Survey results shouldindicate the level of producer support in terms ofbusiness volume and whether or not there issufficient financial commitment to organize andsuccessfully operate the proposed co-op. Resultswill also be used to plan for facilities and neededequipment.

Purpose: To determine whether the proposedco-operative business is economically viable.

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� Evaluate survey results.

In analyzing the results of the survey, estimates ofboth membership and volume should be con-servative. Not all of the producers who areinterested in the project will join and some maywait to join later. Similarly, not all who join willmake the fullest use of the services provided by theco-operative.

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� Collect information on suitable markets,service providers, and/or sources of supply.

Collect market information by talking to peopleinvolved in each level of the marketing chain,including distributors, brokers, retailers, manufac-tures, suppliers, and consumers of the products andservices to be provided by the co-op. If the productor service intended by the co-operative is new tothe market, research into who will purchase it mustalso be carried out.

Useful tools to gather market information includetelephone surveys, personal interviews, salesfigures on existing products, statistical infor-mation, and test marketing. Potential buyers andsuppliers contacted should be asked about:• quantities purchased or supplied annually and

average order sizes;• prices paid at each level of distribution for

these quantities;• pricing variation for differences in quality and

product attributes (such as grade and size);• maximum lead times required for delivery;• seasonality of demand, supply and prices.

� Identify and evaluate potential competi-tors and barriers to entry.

Identify potential competitors operating in each ofthe markets in which the co-operative intends tooperate. Critically evaluate the level ofcompetition and the possible barriers to enteringthese markets. Possible barriers to entry include

the inability to source needed supplies orproduction inputs, consumers’ loyalty to anestablished brandname, government regulations,and the cost of acquiring market information orprocessing technologies needed to competeeffectively.

� Consider alternatives to the formation of anew co-operative.

Contact other co-operatives which provide similarservices and assess the potential for linking upwith existing businesses. Even if starting a newco-operative is the best course of action, the searchfor beneficial links with other co-operatives andbusinesses should continue on an ongoing basis.

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� Determine capital requirements.

To determine the capital requirements of theproposed co-operative, you will need to makefinancial projections for the start-up and the firstthree years of operations. Cost estimates should bebased on the expected business volume plus someallowance for future expansion.

Sufficient capital will be needed to cover:• start-up costs - are those costs which are

incurred before any revenues are generated.They generally include the cost of productsrequired to start operations; initial operatingand personnel costs incurred prior to startingoperations; and the cost of preparing andimplementing the business plan.

• οperating costs - include items such asemployee salaries, utilities, taxes, deprecia-tion, interest, and marketing costs (see page 14for a checklist of operating costs).

• capital costs - include land, buildings,machinery and equipment.

Consult with professionals and skilled techniciansto determine the need for new facilities and assessthe value of any existing facilities being

� Research Question: Are producers interestedin starting a co-op? What services or products arethey interested in having the co-op provide?

� Research Question: Does the proposedco-operative business have an economic role toplay in the market place?

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considered. Investigate the possibility of leasingexisting facilities and equipment as opposed topurchasing.

� Estimate expected sales and revenue.

Sales and revenue estimates for a marketing orprocessing co-operative should be broken downaccording to each commodity and quality gradehandled by the business (including by-products).For a supply co-operative, estimate the sales andrevenues for each type of service and productprovided by the co-op.

� Develop financial statements.

Organize financial information in commonly used

statements, including:• an income statement, which relates expected

revenue to expenses;• a balance sheet which outlines members’ equity

in the co-operative;• a cash flow statement which records the inflow

and outflow of cash.

Information contained in the financial statementswill be used to measure the likelihood of successof the co-op in comparison to similar businesses byprospective lenders and other stakeholders.

� Research Question: Can the co-operativeefficiently deliver the intended services orproducts at a price people are willing to pay?

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� Conduct a sensitivity analysis.

An important part of the feasibility analysis is toreview the sensitivity of financial projections tochanges in operating assumptions. For example,what impact will a 25 percent decrease in productsales have on profitability? Other key factorsmight include wage rates, operating efficiencies,and interest rates. Include “best” and “worst” casescenarios in your analysis. Note that aco-operative’s lowest possible operating costsgenerally occur when its members furnish it withthe maximum amount of business it can handle.

� Examine financing options.

Co-operative businesses finance their operationsthrough a combination of member investment anddebt financing. Investment of capital in a co-op bynon-members is prohibited under the B.C.Cooperative Association Act.

The best source of financing for a co-operative isfrom members—member equity forms the basisfor producer ownership of the business and is usedto apply for debt financing. Ways in whichmembers contribute equity capital to their co-opsinclude:• direct contributions such as membership fees or

share purchases;• agreements to withhold a portion of net

earnings from the co-op’s business operations;• assessments based on units of product or

services sold or purchased.

The more financing members provide, the less theco-operative business will need to borrow. Ageneral rule of thumb for a new co-operativebusiness is to meet forty to fifty percent of itscapital requirements through member investment.

� Hold a general meeting to review theresults of the feasibility study.

Once the three components of the feasibility studyare complete, hold a general meeting of the poten-tial membership to review the results. Prepare forthe meeting by sending copies of the feasibilityresults to potential members along with a summaryof the steering committee’s recommendations.Encourage participants to bring other potentialmembers.

Include the following items in your agenda:• a step-by-step review of the findings of the

producer survey, the market analysis, and theprojected financial feasibility of the co-op.

• discussion about all aspects of the feasibilitystudy including the level of producer commit-ment required, potential markets andcompetition.

• a vote on whether or not to proceed. If the voteis positive, form subcommittees and delegatethe tasks involved in completing the next stepsin the development process.

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� Decision Question: Are potential membersconfident enough in the results of the feasibilitystudy to proceed with the formation of the co-op?

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Careful planning is one of the most vital parts ofany successful business. A business plan outlinesand defines every aspect of a business’soperations—including who is involved, what itsactivities are, how it is organized, and how it isfinanced. Documenting these aspects in detail willhelp your group to discover potential problemsbefore they happen, allowing you to plan andprepare to avoid them. Clearly outlining thefeatures, goals and objectives of the proposedco-op on paper will also help to create a commonpurpose among members and will put them in abetter position to explain the co-operative toothers, including prospective members, lenders,customers and suppliers.

Business plans usually follow a conventionalformat. A sample outline for a business plan isprovided on page 19. In general, all business planscontain the following five main components:• a description of the business;• a marketing plan;• a financial plan;• a production plan;• a human resources plan.Each planning component should cover a period ofat least three years and should contain clearlydefined goals, strategies and time lines forimplementation.

The development of a business plan for a co-op ismuch the same as for any other business. There area number of resources available to guide producersthrough the development of a business plan (seepage 34). Below are a few guidelines specific todeveloping a plan for a co-operative business.

� Describe the governance structure of theproposed co-operative.

In the business description clearly describe thegovernance structure of the co-operative, including

the basis for director representation, votingmethods, board officers and their terms. You willalso need to define each of these aspects in theco-operative’s rules, discussed in the followingsection. Note that the directors of a co-operativemay be selected to represent geographical districts,commodities handled, or some other basis thatprovides equitable representation of themembership.

� Develop a marketing strategy.

Describe how the co-operative proposes to gainand defend market share on an ongoing basis. Youwill need to develop a plan to address how theco-op will react to the various strategies thatcompetitors may use to retain their business, suchas price changes or better contract terms. Twobasic types of marketing strategies exist:• sell the product or provide the service at a

lower price than the competition; or• invest in creating a product or service with

qualities not currently offered in the market.

Offering a product or service at a lower price thanany competitor is the most effective approach togaining and defending market share. This strategydemands that costs be held to levels lower thanthose achieved by others in the industry. Investingin creating unique products or services will likelyincrease costs. However, this can be an effectivestrategy if competitors have difficulty offeringsimilar products or services at a lower cost.Regardless of your chosen marketing strategy,organize the co-operative to operate in the lowestcost, most efficient manner possible.

� Carefully evaluate capital requirements.

Decisions regarding capital requirements willinfluence the co-operative’s operations for manyyears. Avoid using so much capital for fixedfacilities and start-up that cash flow is jeopardized.

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Purpose: To document in detail how theco-operative will operate and how it will beorganized and financed.

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� Research Question: How will theco-operative gain and defend its market share?

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To avoid elaborate or costly facilities, a newco-operative should initially limit the services orproducts offered to those absolutely needed by themembers. If successful, the co-op can expand at alater date.

� Develop a plan which addresses thetreatment of co-op surplus and member equity.

When developing the financial plan, seek theadvice of an accountant or other consultantsfamiliar with co-operative finance to ensure thatthe unique financial requirements of co-opbusinesses are addressed. In particular, the planmust address:• the amount of net income (surplus) to be paid to

the members as patronage refunds at the end ofeach fiscal year;

• the amount of net income to be retained withinthe co-op as equity which is allocated to themembers (retained patronage refunds);

• the amount of net income to be retained withinthe co-op as unallocated equity;

• when and how member equity will returned tothe members.

A systematic program for returning equity tomembers ensures that the people who own andfinance the co-op are also those who currently useand benefit from the services provided. When theco-operative’s equity needs are met, a portion ofeach year’s income should be used to pay out theoldest patronage-based equity to members. Thisequity is replaced by funds retained from thecurrent year’s patrons.

For a non-technical introduction to co-operativefinance, please refer to the second booklet in thisseries, entitled “Financing AgriculturalCo-operatives: An Overview.”

� Develop a communication and trainingprogram.

Ongoing communication and education are keyaspects of a co-operative’s human resource plan

and training policy. When members are involvedand informed about their co-operative, they aremore willing to invest in and patronize theirco-operative. Effective communication andeducation programs require financial support andmust be backed by specific board and managementpolicies.

Establish a director training schedule to discusstopics such as legal liability, co-operative finance,management supervision, and member relations.Plan to hold information sessions for the entiremembership which cover topics such as memberresponsibilities, co-operative operating policies,and the tax treatment of patronage refunds.

� Hold a meeting to review the businessplan.

The purpose of this meeting will be to evaluate thebusiness plan, make adjustments and eitherapprove or reject it. Prepare a report whichsummarizes the findings of the business plan anddistribute it to potential members before themeeting. Conclude the report with the committee’srecommendation on whether or not to proceedwith the development of the co-operative.

Include the following items on your agenda:• a step-by-step review of all aspects of the

business plan;• discussion regarding the proposed business

organization, management structure, gover-nance structure, financial needs, memberequity arrangements and any adjustmentswhich need to be made;

• a vote on whether or not to proceed with theorganization of the co-operative.

� Decision Questions: Is the business planacceptable to the membership? Should theorganization of the co-op continue?

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Incorporation gives the co-operative a distinctlegal standing and limits the financial liability ofits members. A co-operative can be incorporatedunder federal or provincial legislation. Mostagricultural co-operatives in Canada areincorporated under provincial legislation.Members of the steering committee should befamiliar with the Cooperative Association Act andthe Companies Act to ensure that the requirementsof the province of British Columbia are met. If it isthe co-operative’s intent to conduct business inmore than one province, you should investigatefederal incorporation.

Use the services of an attorney or advisor familiarwith co-operatives throughout this step. Suchservices are important to ensure that all documentscomply with provincial and federal laws and willnot conflict with operating procedures of theco-operative.

� Select and register a name.

According to B.C. law a co-operative’s legal namemust contain the word “co-operative.” You mayalso include one of these words: association,society, union or exchange. You cannot use theterms “company” or “limited.” Note that it isillegal in British Columbia to use the term“co-operative” in the name of an organizationunless it is incorporated under the CooperativeAssociation Act.

A Name Approval Request Form (available fromthe Ministry of Finance and Corporate Relations)must be submitted to the Registrar of Companies.A search will be conducted to ensure no othergroup is using the same name. The name search isa mandatory requirement toward incorporation.

� Draft the Memorandum of Association.

The Memorandum of Association is a legallybinding, witnessed document. It sets out basicinformation about the co-operative and specifies:

• the name of the co-operative;• the co-op’s registered office address;• business restrictions and restrictions of powers;• the value, type and number of shares;• the names and addresses of the founding

members.A minimum of five people are needed toincorporate a co-operative in British Columbia.To belong to a co-operative, individuals mustpurchase at least one member share. In addition tomember shares, different classes of investmentshares can be issued to members, each withdifferent values and rights attached.

For a complete description of the Memorandum ofAssociation, see the Cooperative Association Act,Schedule A.

� Draft the Rules of the Association.

The Rules of the Association state how theco-operative will conduct business. To incorporatein B.C., the rules must be consistent with theCooperative Association Act which specifieswhich topics must be addressed. Important areasthat require rules include:• membership requirements;• the rights and responsibilities of members;• the number of shares a member may hold;• how shares are transferred;• the grounds and procedures for member

expulsion;• how meetings are called and conducted;• how directors are elected or removed, their

duties, terms of office, and compensation;• the dates of the fiscal year;• the requirement to conduct business on a

co-operative basis;• how net surplus of the co-op will be distributed;• the process for redeeming member equity;• the handling of losses;• how non-member business is treated;• the dissolution of the co-operative;• the process for amending the rules.

Purpose: To prepare necessary legal documentsand incorporate the co-operative.

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A sample set of rules is provided in Schedule C ofthe Act. However, since no single set of rules fitsevery co-operative, the sample rules should bechanged to reflect your co-operative’s specificmission and objectives. Considerable care shouldbe given to drafting the rules as they are legallybinding on all members of the co-operative. Oncethey are filed and approved, the rules can only bechanged by an extraordinary resolution. Anextraordinary resolution requires a majority vote ofnot less than 75 percent of the membership presentat a general meeting and the approval of theRegistrar of Companies.

� Incorporate the co-operative.

Incorporating a co-operative under B.C. legislationinvolves paying an incorporation fee of $250∗ andsubmitting the following documents to theSuperintendent of Co-operatives in Victoria:• Memorandum of Association;• Rules of Association;• Notice of Registered Office;• List of First Directors;• Statement of Intent.

The List of First Directors includes the names, andthe occupations of the founding directors (oftenthe members of the steering committee). It mustalso state the period for which the directors willserve. The term of the first directors usually lastsuntil the first general meeting.

The Statement of Intent is a supplementarydocument and is not legally binding. However, theSuperintendent of Co-operatives will request acopy and will use it to determine if the businesswill in fact operate on a co-operative basis. TheStatement includes the following information:• the services the co-op intends to provide;• the way in which the co-op proposes to provide

those services to its members;• any connection the co-op expects to have with

other co-op organizations or businesses.

Once the documents are approved by theSuperintendent, the B.C. Registrar of Companiesissues a certificate of incorporation and theco-operative is entered on the corporate register.

� Draft other legal documents.

In addition to the documents required forincorporation, legal agreements between themembers and the co-op, such as membership andmarketing agreements, should be drafted at thispoint. You will need to ensure that suchagreements are consistent with the co-op’s rulesand memorandum. These documents shouldtherefore be drafted by (or, at a minimum,reviewed by) an attorney experienced withagricultural co-operatives.

Co-operative marketing agreements specify thevolume of product members are obligated tomarket or deliver to the co-operative (see page 22).The following subjects should be specified in amarketing agreement:• the extent of members’ obligation to market

through the co-operative;• the terms and conditions under which the

products will be marketed;• accounting procedures.For marketing co-operatives that choose not to usemarketing agreements, these subjects should beaddressed within the co-operative’s rules.

� Hold the first annual general meeting toapprove the rules and elect directors.

Within three months of incorporation, the board ofdirectors must call the first annual general meetingof the co-operative. At the meeting, members willneed to elect directors to the board and vote toaccept or amend the rules of the co-op. Anyamendments to the rules are subject to review bylegal council. Before the meeting, circulate a copyof the rules and a list of board candidates to allprospective and current members.

� Decision Questions: Will the bylaws beapproved? Who will serve on the board ofdirectors?

∗ Fees for incorporating a co-operative may increase over time—

check with the Registrar of Companies for the current amount.

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A number of important activities will need to becompleted before the co-op can begin operations.These activities include: conducting a membershipdrive, acquiring capital, obtaining facilities, settingup accounting systems, hiring management andtraining staff.

To plan for the start-up of the co-op’s operations,define and determine the sequencing of all thetasks connected with making the business oper-ational and ready to serve the members. Assigndirectors individual tasks or committee respon-sibilities to implement the business plan. Usecommittees to work in areas such as membership,facilities and site selection, finance, and commu-nications. Committees can include members, but atleast one board member should be on eachcommittee to enhance communication.

Committees can also be useful in the ongoingmanagement of the co-operative. Additionaltemporary or permanent committees might includeadvisory groups for youth and young memberactivities, education and training, long-termplanning, commodities and services, member andpublic relations, and legislative affairs.

� Hold a membership drive to secure equityand patronage commitments.

A new co-operative must have enough members tostart operation and justify its existence. To encour-age membership, it is important for producers tounderstand what their co-operative is and how itoperates. Prepare a summary of the co-op’sbusiness plan and use it to outline the advantagesof membership to potential members, such as theprovision of services or the potential for increasedreturns.

If the co-operative is unable to solicit sufficientpatronage and equity commitments fromproducers during the membership drive, table theproject and reassess the feasibility of the proposedbusiness, its operations and its financial andorganizational structure.

� Apply for debt capital.

Once member financing is secured, it can be usedas a basis to apply for debt capital. Lenders willinsist on seeing certain key documents beforeconsidering a loan request, including:• projected volume of business;• market information;• projected cash flow information;• operating statement;• balance sheet;• schedule of fixed asset costs and depreciation;• a summary of scheduled financing needs and

capital sources.This information should be readily availablewithin the co-operative’s business plan.

� Acquire facilities.

Facilities need to be conveniently located formembers but should also enable the establishmentof good distribution links with suppliers, markets,and other business services. Factors to consider inlocating facilities include:• proximity to members and markets;• transportation routes, highways and railways;• availability of labour;• availability of land and buildings;• levels of taxation;• environmental and other regulations.

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Purpose: To implement the business plan andprepare for the start-up of the co-op’s operations.

� Decision Question: Do you have a strongenough commitment from producers to beginoperations as outlined in the business plan?

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� Set up record keeping and accountingsystems.

Accurate accounting of money is critical tooperating on a sound business basis and to avoidyear-end losses. Requirements include:• developing and installing an accounting

system;• preparing financial reports, including operating

and capital improvement budgets;• reporting to the membership in a clear and

timely manner;• providing for auditing services;• conducting long-term planning.

In addition to the complete and accuratedocumentation of income and expenses forplanning and tax purposes, a co-operative mustkeep exact member records. Member recordsaccount for members’ initial and subsequentinvestments and track members’ patronage. Theinformation included in member records is neededto determine the amount of net earnings membersare entitled to at the end of the fiscal year.Members will also need these records for theirown personal accounts, particularly for income taxpurposes.

An annual independent audit serves as an outsideappraisal of the co-operative’s financial condition,and as a check on business procedures and compli-ance with tax and other legal requirements. Aprofessional independent audit may be required bythe Superintendent of Co-operatives, particularlyif the co-op has a broad base of membership.Other agencies may require an independent auditas well, such as government funding agencies ormajor lenders.

� Select a manager.

Selecting the manager is one of the most criticaltasks for the new board of directors. Begin the taskby developing a position description. Include asupplemental statement outlining the relationshipbetween the manager and the board of directors ina co-operative, and the responsibilities of each (seepage 24 for a discussion of board and managementresponsibilities).

Qualities to seek in a manager include education,experience, and the ability to work with people.Judge these qualities from three perspectives:commodity expertise, management skills, and aknowledge of co-operatives. The candidate willneed to understand the special nature of theco-operative’s patrons because they are bothcustomers and owners. This dual relationship addsa unique dimension to a candidate’s requirementsto work with people on a daily business basis.

Good managers are hard to find, especially forco-operatives. For leads, contact the managers ofother co-ops, directors of co-op associations, theadvisers who helped form the co-operative, andemployment agencies.

� Publicize the co-op’s activities anddevelop community recognition.

Publicizing the co-op’s accomplishments andactivities will help to:• create a positive image of the co-op in the

community;• increase awareness about the benefits of

membership;• keep current members appraised of the co-op’s

progress.

Ways to develop community recognition of theco-op include:• writing news releases for local papers and

association newsletters;• having board members do presentations for the

chamber of commerce and other communitygroups;

• celebrating milestones such as opening afacility, installing major equipment, signing acontract or receiving a grant.

Remember to involve local politicians, from alllevels of government. Their support can becritical to the co-operative’s ongoing success.

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Several of the guidelines for the formation of aco-operative apply to more than one step of theprocess and are also critical to the continuingsuccess of the co-operative’s operations.

� Keep members informed and involved.

When members are involved and informed aboutthe co-operative, they are more willing to patronizeand invest in the co-operative. Memberresponsibilities start with the conception of theco-operative and remain throughout the life of thebusiness to assure successful organization, soundmanagement, and operation (see page 26).

Ongoing communication and education programs(targeted to co-op members, directors, manage-ment and staff) are an integral part of the successof a co-operative business. Such programs requirefinancial support and must be backed by specificboard and management policies.

� Use advisors and committees effectively.

Effectively organizing human resources and usingthe expertise of advisors is central to the success ofany business. Maximum participation by potentialmembers is crucial to the success of a co-operative.

Committees provide members with the oppor-tunity to develop skills and to participate in theaffairs of their co-operative—increasing theirfeeling of ownership and responsibility for itssuccess. Committees are useful for both thestart-up and the ongoing management of theco-operative.

� Maintain good board-manager relations.

The differing responsibilities of the board ofdirectors and the manager must be clearlyunderstood and carried out. Directors representmembers and are legally responsible for theperformance and conduct of the co-op. Directors’

three major responsibilities are to set policies,employ and evaluate the general manager, andsecure adequate financing for the co-operative.Management carries the responsibility for the dailyoperations of the co-op. The use of policy andprocedure manuals and job descriptions along withfrank discussions of questions when they arise canhelp to maintain good board and managementrelations.

� Conduct effective meetings.

A co-operative is a business and its meetingsshould be conducted in a businesslike manner.Parliamentary procedure is appropriate for orderlydemocratic group action. An effective meeting isthe result of carrying out several successive steps:preparation, good facilitation, member parti-cipation, following an agenda, and followingthrough on meeting actions.

� Follow sound business practices.

The major challenge to co-operative members, theboard of directors, and operating managementoccurs after business operations begin. Operatingon a sound business basis includes theimplementation of an accurate accounting system,regular preparation of financial statements,reporting to the membership in a clear and timelymanner, and keeping exact member records. It alsoinvolves a continual evaluation of costs and theproductivity of labor, facilities, equipment andtechnology employed by the co-op.

Once the co-operative is organized and operating,members will need to consider how they want it togrow. This task requires both short-term planningand long-term strategic planning. Strategicplanning looks three to five years ahead andinvolves developing a vision and missionstatement, appraising the future, assessing theexternal and internal business environment,

(Adapted from How to Start a Co-operative, United States Department of Agriculture, Rural Business/Cooperative Service).

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defining desired goals with stated objectives, anddeveloping a course of action to achieve thesegoals.

� Forge links with other co-operatives andorganizations.

The search for beneficial links with otherco-operatives, businesses and associations shouldcontinue on an ongoing basis. Alliances with other

businesses can be valuable sources for supplies,marketing outlets, and related services.Membership in provincial and nationalassociations can keep the new co-operative abreastof what others around the country are doing. Theseassociations can be sources of education andtraining programs, and legislative and publicrelations support activities. They can also help toidentify sources of special expertise.

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� Ministry of Agriculture and Food

PO Box 9120 Stn Prov GovtVictoria, British Columbia V8W 9E4Ph: (250) 387-5121Fax: (250) 387-1522http://www.agf.gov.bc.ca

With regional and district offices in Abbotsford, Cranbrook, Creston, Courtenay, Dawson Creek,Duncan, Fort St. John, Kamloops, Kelowna, Oliver, Prince George, Sidney, Smithers, Vernon andWilliams Lake.

� Ministry of Small Business, Tourism and Culture - Co-operative Development Program

Fourth Floor, 1405 Douglas StreetPO Box 9800, Stn Prov GovtVictoria, British Columbia V8W 9W1Ph: (250) 387-5998Toll Free: 1-800-988-8299Fax (250) 356-8948.http://www.co-op.sb.gov.bc.ca

Provides assistance and information to people interested in forming co-operatives in BritishColumbia.

� Centre for the Study of Co-operatives

101 Diefenbaker PlaceUniversity of SaskatchewanSaskatoon, Saskatchewan S7N 5B8Ph: (306) 966-8509Fax: (306) 966-8517http://www.co-op.studies.usask.ca

The Centre for the Study of Co-operatives is a post-secondary teaching and research centre. TheCentre offers university courses on co-operatives and undertakes and publishes research aboutco-operatives. It also maintains a resource centre of materials by and about co-operatives.

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� Partners in Progress

This program is targeted to groups consisting of two or more individuals, companies, organizationsor associations, who want to work together in partnership to benefit B.C.’s agri-business, fisheriesand food sectors. The Partners in Progress program is made up of:• Partners in Development: provides funding to enable team members to broaden their understand-

ing of the issues and opportunities so they can clarify their common goal and develop a workableaction plan; and

• Partners in Action: provides funding to help established groups who know what they want to doand have planned how to achieve their goal as a team to carry out projects that have the potentialto benefit all the partners as well as the sector and the community.

Funding is acquired through the Ministry of Agriculture and Food and requires a minimum of 25%of total costs to be provided by the applicant group. Applications are available at all BCMAF districtoffices.

Ministry of Agriculture and FoodPO Box 9120, Station Prov GovtVictoria, B.C. V8W 9B4Contact Person: Sherry GreeningPh: (250) 386-1833Fax: (250) 953-5162E-mail: [email protected]://www.agf.gov.bc.ca

� Investment Agriculture Foundation (IAF)

The purpose of the IAF is to foster increased long-term growth, employment and competitiveness ofB.C.’s agriculture and food industry. Strategic priorities of this program include: the increasedpotential of B.C. agriculture through competitiveness assessments, market research and analysis,new product development, and increased value-added processing. Funding is provided to legallyrecognized commercial and non-profit organizations, including co-operatives.

B.C. Investment Agriculture FoundationP.O. Box 8248Victoria, B.C. V8W 3R9Ph: (250) 356-1833Fax: (250) 953-5162

� Partners in Co-operatives (PIC) Fund

Provides financial assistance toward the incorporation of new co-operatives through the funding ofactivities such as member/board development, rule design, and community seminars. Typicalfunding is between $2,000 and $5,000 and is provided through the Ministry of Small Business,Tourism and Culture’s Co-operative Development Program.

Co-operative Development ProgramSixth Floor, 1405 Douglas StreetP.O. Box 9805, Stn Prov GovtVictoria, B.C. V8W 9W1Contact Person: Bhagwant SandhuPh: (250) 387-5998Fax: (250) 387-6055Toll Free: 1-800-988-8299http://www.co-op.sb.gov.bc.ca

� Technology Assistance Program (TAP)

Provides financial assistance to small and medium sized B.C. companies undertaking research,product development or process improvement projects which are engineering or science oriented andwhich involve technology or research. Management consulting or market research projects are noteligible. Funding of up to $40,000 is available, with the amount of the contribution equal to 50% ofthe project costs. Funded by the Ministry of Employment and Investment.

Pace Technologies Inc.c/o National Research Council - IRAP Wing3250 East MallVancouver, B.C. V6T 1W5Contact Person: Diana Nacer, TAP CoordinatorPh: (604) 221-3109Fax: (604) 221-3101E-mail: [email protected]

� Market Assessment of Research and Technology (MART)

MART is intended to help B.C. companies determine the market potential of their discoveries andtechnological innovations. Funding is provided to hire consulting services to assess the marketpotential and develop a marketing strategy for a product or process. Private sector proponents arerequired to contribute 25% of external costs. The program is funded by the Information, Science andTechnology Agency and the National Research Council, and is delivered by Pace Technologies Inc.

Pace Technologies Inc.Suite 800 - 4710 KingswayBurnaby, B.C. V5H 4M2Contact Person: Christopher RyanPh: (604) 433-5979 or 1-888-311-PACEFax: (604) 438-6564E-mail: [email protected]://www.scitech.gov.bc.ca/guide1/mart.htm

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� Industrial Research Assistance Program (IRAP)

The National Research Council delivers a number of financial assistance programs under theumbrella of the Industrial Research Assistance Program (IRAP) including financial assistance forsmall and medium-sized companies wishing to enhance their technological capability. Eligibleactivities include technical feasibility studies; small-scale research and development; externalshort-term or small-scale technical assistance. IRAP will cover up to 75% of eligible project costs,up to $15,000 per project and $25,000 per applicant per year.

IRAP -BC Regional OfficeNational Research Council3250 East MallVancouver, B.C. V6T 1W5Ph: (604) 221-3100Fax: (604) 221-3101http://bc.ctn.nrc.ca/irap/

� Program for Export Market Development (PEMD)

PEMD provides contributions towards the costs incurred by companies in the development of exportmarkets. Contributions are repayable based on incremental sales in specified markets. Funded byIndustry Canada.

Industry CanadaInternational Trade Centre2000-300 West Georgia StreetVancouver, B.C. V6B 6E1Contact Person: Jeanette DesmaraisPh: (604) 666-3947 or 666-5000 or 666-0434Fax: (604) 666-0954E-mail: [email protected]://www.dfait-maeci.gc.ca/english/trade/handbook/menu.htm

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B.C. Business Co-operatives -A Start-up Guide. Province of British Columbia. (Pamphlet)

Factors Critical to the Success or Failure of Emerging Agricultural Cooperatives. R. Sexton and J. Iskow.Giannini Foundation Information Series No. 88-3. Giannini Foundation of Agricultural Economics,University of California. June 1988. (Book)

How to Start a Co-operative. Rapp, G. and G. Ely. United States Department of Agriculture, RuralBusiness/Cooperative Service - Cooperative Information Report 7. Revised September 1996. (Booklet)

Incorporating A Co-operative. Province of British Columbia; Ministry of Small Business, Tourism, andCulture. (Pamphlet)

New Generation Co-operatives: For Agricultural Processing and Value-Added Projects, A DevelopmentGuide. Saskatchewan Economic Development. (Pamphlet)

Starting An Agricultural Marketing Cooperative. Center for Co-operatives, University of California,Davis. October 1994. (Booklet)

Steps to Starting a Marketing Co-op. Zimbelman, K., E. K. Coontz and A. Malan. Center forCooperatives, University of California and the Northwest Cooperative Federation. 1996. (Booklet; alsoavailable in Spanish)

Understanding Cooperatives: How to Start a Cooperative. Rapp, G. United States Department ofAgriculture, Rural Business/Cooperative Service - Cooperative Information Report 45, Section 14.January 1995 . (Pamphlet)

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Co-operative Financing and Taxation. Rathbone, R. C. United States Department of Agriculture, RuralBusiness/Cooperative Service - Cooperative Information Report 1, Section 9. Revised January 1995.(Booklet)

Equity Redemption and Member Equity Allocation Practices of Agricultural Cooperatives. Rathbone R.C. and R. A. Wissman. Agricultural Cooperative Service - Research Report 124. October 1993. (Booklet)

Financing Agricultural Co-operatives: An Overview. Harris, A. Canada/B.C. Farm Management Programand BCMAF. 1998. Available at BCMAF district offices. (Booklet)

Understanding Cooperatives: Financing Cooperatives. Rathbone, R. C. United States Department ofAgriculture, Rural Business/Cooperative Service - Cooperative Information Report 45, Section 7. January1995. (Pamphlet)

What are Patronage Refunds? Frederick, D. A. and G. Ingalsbe, United States Department of Agriculture,Agricultural Cooperative Service - Cooperative Information Report 9. Reprinted June 1993. (Pamphlet)

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Working with Financial Statements - Guide for Cooperative Members. Wissman, R. United StatesDepartment of Agriculture, Rural Business/Cooperative Service - Cooperative Information Report 43.Revised May 1996. (Booklet)

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Preparing a Business Plan: A Guide for Agricultural Producers.A series of guides available for a wide range of commodities. Published by BCMAF as part of Planningfor Profit. Available through BCMAF district offices. Copies can also be downloaded from the B.C.FBMI-net site at http://FBMInet.ca/bc. (Series of handbooks)

Rural Business Planner CD-ROM.A flexible and easy to use software package consisting of a business plan outline, definitions, examples,and a series of checklists. Also includes a searchable resource library.Available from: Canadian Farm Business Management Council. 75 Albert Street, Suite 1110, Ottawa,Ontario, K1P 5E7. Toll Free: 1-888-232-3262.

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“New Generation Cooperatives and Cooperative Theory.” Harris, A., B. Stefanson, and M. Fulton.Journal of Cooperation 11: 15-28. 1996. (Journal article)

New Generation Co-operatives: Revitalizing Rural Communities. B. Stefanson, M. Fulton and A.Harris. Centre for the Study of Co-operatives, University of Saskatchewan, Saskatoon. (Booklet)

New Generation Co-operatives: Opportunities in Agricultural Processing. Centre for the Study ofCo-operatives. 1997. (Video - 21 minutes)

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Appraising Manager Performance. Rapp, G. United States Department of Agriculture, Rural Business/Cooperative Service - Cooperative Information Report 136. September 1994. (Booklet)

“Conducting Effective Meetings” factsheet prepared by the Co-operatives Directorate, SaskatchewanEconomic and Co-operative Development as part of Co-operatives in Saskatchewan: An InformationSeries.

Introduction to Directors’ Liability and Financial Accountability in Farm Organizations. Stinson, L. R.Canada/B.C. Farm Business Management Program, B.C. Ministry of Agriculture, Fisheries and Food.(Handbook available through BCMAF district offices)

Legal Responsibilities of Directors and Officers in Canadian Co-operatives. Ish, D. and K. Ring. Centrefor the Study of Co-operatives, University of Saskatchewan, Saskatoon. December 1995. (Book)

"The role of management behavior in agricultural cooperatives." Cook, M. Journal of AgriculturalCooperation 9: 42-58. 1994. (Journal Article)

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Agricultural Cooperatives As Effective Marketers of Value-Added Products. Hardesty, S. D. Centre forCo-operatives, University of California - Research Report No. 4. May 1992. (Booklet)

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Analysis of Economic Motives for Cooperative Conversions to Corporations. Collins, R. A. Centre forCo-operatives, University of California - Research Report No. 1. May 1991. (Booklet)

Co-operatives in Saskatchewan - An Information Series. Co-operatives Directorate, Saskatchewan Eco-nomic and Co-operative Development. (Series of factsheets)

Co-operative Organizations and Canadian Society: Popular Institutions and the Dilemmas of Change.Edited by Fulton, M. University of Toronto Press. Toronto. 1990. (Book)

Farmer Cooperative Theory: Recent Developments. Staatz, J. M. United States Department ofAgriculture, Agricultural Cooperative Service - Research Report 84. June 1989. (Book)

Make No Small Plans: A Cooperative Revival for Rural America. Egerstrom, L. Lone Oak Press, Ltd.Rochester, Minnesota. 1994. (Book)

Making Membership Meaningful: Participatory Democracy in Co-operatives. International Joint Projecton Co-operative Democracy. Centre for the Study of Co-operatives, University of Saskatchewan,Saskatoon. 1995. (Book)

The Nature of Co-operation. Craig, J. G. Black Rose Books, Montreal. 1993. (Book)

Journal of Cooperatives. Produced by the National Council of Farmer Cooperatives. 50 F Street N.W.,Suite 900, Washington, D.C. 20001. (Journal)

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